Philcon says ‘oversupply’ pressuring palay prices


Palay prices will keep dropping as rice imports boost slow-moving domestic inventories, an industry group claimed.

In an interview, Philippine Confederation of Grains Associations (Philcon) President Joji Co warned that continued rice imports would drive prices to about P13 per kilo for wet palay and P17 per kilo for dry and clean palay in major rice producing provinces by yearend.

Based on latest available data, the average farmgate price of palay was at P18.26 per kilo as of the third week of September.

The Philcon chief claimed that warehouse stocks were not moving fast enough and were in fact being boosted by imports of the grain.

“This year we actually see an oversupply, a glut because some of the local harvests during the summer were not yet sold. The NFA (National Food Authority) has also not yet disposed of all their stocks. We also have a volume arriving through private sector importation,” Co said.

For this year alone, rice imports have neared 2009 levels with over 2.1 million MT of rice allowed to enter the country. It is the biggest rice import volume under the Aquino administration.

The NFA has contracted shipments of 1.8 million MT of rice for this year – including 500,000 MT contracted in February, 150,000 MT and 100,000 MT in June, a 187,000 MT MAV-Omnibus Origin private importation, the 600,000 MT allocated under the Minimum Access Volume (MAV)-Country Specific Quota opened in July and another 250,000 MT last month.

The approved imports do not include a volume of 300,000 MT under last year’s MAV that arrived earlier this year.

The interagency Food Security Committee has also allowed the NFA to proceed with the importation of another 500,000 MT rice intended for the first quarter of 2016.

Socioeconomic Planning Secretary Arsenio Balisacan has said that the government wanted to beef up rice imports given the El Nino threat. With a dry spell expected to extend well into next year, he said the government wanted to ensure that it had enough of a rice buffer.

Local traders, seeing an opportunity, cornered palay procurement in the last season, leading to the drop in farmgate prices even as retail rice continues to stay at P37 to P41 per kilo.

The Department of Agriculture (DA) has warned the NFA that its massive rice could pull down farmgate prices below “profitable” level. The government support price for palay is P17 per kilo.

“If farmgate prices drops below P17 per kilo, the grains agency should be moving to stabilize the price of rice and to ensure continued planting for food security,” the DA said.

With the Aquino government set to step down next year, Philcon’s Co said his organization would urge the next administration to focus on bringing down palay production costs.

“We need to study our irrigation systems. There are areas that needed to be rehabilitated so we can retain hectarage for palay production,” he said.

The Philcon official also said that the next administration should improve milling efficiency and reduce wastage.

“We are losing 5 to 25 percent to milling and drying process,” he claimed.


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